**SECURITIES
AND EXCHANGE COMMISSION**
 **Washington,
DC 20549**
  **Form
10-Q**
  (X)
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
  **For
the quarterly period ended March 31, 2005**
  (_)
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
  For the
transition period from _______________ to ________________
  Commission
file number 1-14827
  **EVCI
Career Colleges Holding Corp.**
 (Exact
name of registrant as specified in its charter)
  Delaware
    **06-1488212**(State
      of other jurisdiction of incorporation or organization)
    (IRS
      Employer Identification Number)
 
  **1
Van Der Donck Street, 2** **nd** **Floor, Yonkers, New York 10701**
 (Address
of principal executive offices)
  **(914)
623-0700**
 (Issuer’s
telephone number, including area code)
 
 Indicate
by check mark whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. [X] Yes  [_]
No
  Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date: 12,429,603 shares as of May 11,
2005.
  Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act). [_] Yes  [X]
No
 
 
 
 **Table of
      Contents****Part I****Financial
      Information****Item
      1. Financial Statements**
    
    **Page**Consolidated
      Balance Sheets as of March 31, 2005 (unaudited) and December 31, 2004
      (audited)
    
    
    1Consolidated
      Statement of Operations for the three months ended March 31, 2005
      (unaudited) and March 31, 2004(unaudited)
    
    
    2Consolidated
      Statement of Cash Flows for the three months ended March 31, 2005
      (unaudited) and March 31, 2004 (unaudited)
    
    
    3Notes
      to Consolidated Financial Statements
    
    
    4**Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations**
    
    
    6****Overview
    
    
    7Comparison
      of the three months ended March 31, 2005 and March 31,
2004
    
    
    9Liquidity
      and capital resources
    
    
    14Forward-looking
      statements and risk factors
    
    
    14**Item
      4. Controls and Procedures**
    
    
    17**Part
      II****Other
      Information****Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds**
    
    
    17**Item
      6. Exhibits**
    
    
    18**Signatures**
    
    
    23
  
   ****EVCI
CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES**
**CONSOLIDATED
BALANCE SHEET****
 ****March
      31,**
    
    **December
      31,******
    
    **2005**
    
    **2004******
    
    
    **(unaudited)**
    
    
    **(audited**)******ASSETS**Current
      assets:Cash
      and cash equivalents
    
    $
    9,928,425
    
    $
    10,504,308Student
      accounts receivable, less allowance for doubtful accounts of $590,000 and
      $105,000, respectively
    
    
    9,222,871
    
    
    6,015,719Prepaid
      expenses and other current assets
    
    
    609,601
    
    
    137,410**Total
      current assets**
    
    
    19,760,897
    
    
    16,657,437Property
      and Equipment - net
    
    
    5,372,691
    
    
    4,733,185Intangible
      assets
    
    
    638,742
    
    
    -Goodwill
    
    
    3,914,624
    
    
    3,914,624Deferred
      income tax asset, net of valuation allowance of $1,827,500
    
    
    5,557,500
    
    
    5,557,500Other
      assets
    
    
    626,500
    
    
    475,226**Total
      Assets**
    
    $
    35,870,954
    
    $
    31,337,972**LIABILITIES
      AND STOCKHOLDERS' EQUITY**Current
      liabilities:Accounts
      payable and accrued expenses
    
    $
    3,614,648
    
    $
    3,046,707Income
      taxes payable
    
    
    -
    
    
    329,729Deferred
      tuition revenue
    
    
    4,371,132
    
    
    1,834,510Current
      portion of capital lease obligation
    
    
    405,516
    
    
    275,329Current
      portion of notes payable
    
    
    318,907
    
    
    318,907**Total
      current liabilities**
    
    
    8,710,203
    
    
    5,805,182Capital
      lease obligation, net of current portion
    
    
    768,455
    
    
    585,337Notes
      payable, net of current portion
    
    
    203,827
    
    
    286,518Deferred
      rent
    
    
    826,255
    
    
    766,710**Total
      liabilities**
    
    
    10,508,740
    
    
    7,443,747Stockholders'
      Equity:Preferred
      stock - $.0001 par value; authorized 1,000,000 shares: none issued and
      outstandingCommon
      stock - $.0001 par value; authorized 20,000,000 shares; issued and
      outstanding 12,429,603 and 12,329,603 shares,
      respectively
    
    
    1,264
    
    
    1,254Additional
      paid-in capital
    
    
    50,723,427
    
    
    49,922,445Accumulated
      deficit
    
    
    (25,362,477
    )
    
    (26,029,474
    )**Stockholders'
      equity**
    
    
    25,362,214
    
    
    23,894,225**Total
      Liabilities and Stockholders' Equity**
    
    $
    35,870,954
    
    $
    31,337,972

**See Notes to Consolidated Financial
Statements****
 ****
 1
 ****
 **EVCI
CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES**
**CONSOLIDATED
STATEMENT OF INCOME**
**(unaudited)** ****
 **Three
      months ended March 31,****2005**
    
    **2004**Net
      revenue
    
    $
    10,130,543
    
    $
    8,392,663Other
      income
    
    
    64,203
    
    
    95,614Total
      revenue
    
    
    10,194,746
    
    
    8,488,277Operating
      expenses:Cost
      of revenue
    
    
    2,264,646
    
    
    1,471,530Selling,
      general and administrative
    
    
    7,034,749
    
    
    4,503,175Total
      operating expenses
    
    
    9,299,395
    
    
    5,974,705Income
      from operations
    
    
    895,351
    
    
    2,513,572Other
      income (expense):Interest
      and financing costs
    
    
    (56,150
    )
    
    (46,336
    )Interest
      income
    
    
    17,796
    
    
    2,205Income
      before provision for income taxes
    
    
    856,997
    
    
    2,469,441Provision
      for income taxes
    
    
    190,000
    
    
    375,000Net
      income
    
    $
    666,997
    
    $
    2,094,441Net
      income per common share:Basic
    
    $
    0.05
    
    $
    0.19Diluted
    
    $
    0.05
    
    $
    0.18Weighted-average
      number of common shares outstanding:Basic
    
    
    12,371,967
    
    
    10,946,801Diluted
    
    
    12,937,900
    
    
    11,665,022
 **See
Notes to Consolidated Financial Statements**
 2
 ****
**EVCI
CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES**
**CONSOLIDATED
STATEMENT OF CASH FLOWS**
**(unaudited)**





**Three
      months ended March 31,****2005**
    
    **2004**Cash
      flows from operating activities:Net
      income
    
    $
    666,997
    
    $
    2,094,441Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation
      and amortization
    
    
    412,651
    
    
    164,562Bad
      debt expense
    
    
    200,000
    
    
    -Non
      cash compensation expense
    
    
    100,992
    
    
    10,800Changes
      in operating assets and liabilities; net of effects of
      acquisition:Increase
      in students accounts receivable
    
    
    (3,392,742
    )
    
    (3,012,264
    )Increase
      in prepaid expenses and other current assets
    
    
    (468,476
    )
    
    (146,384
    )Decrease
      (increase) in other assets
    
    
    (151,274
    )
    
    30,486Increase
      in accounts payable and accrued expenses
    
    
    567,550
    
    
    891,420Decrease
      in income taxes payable
    
    
    (329,729
    )
    
    -Increase
      in deferred tuition revenue
    
    
    2,536,622
    
    
    1,305,990Increase
      in deferred rent
    
    
    59,545
    
    
    151,083**Net
      cash provided by operating activities**
    
    
    202,136
    
    
    1,490,134Cash
      flows from investing activities:Purchases
      of property and equipment
    
    
    (653,379
    )
    
    (499,901
    )Repayment
      of notes receivable
    
    
    -
    
    
    22,500Payments
      on accrued purchase price payable
    
    
    -
    
    
    (35,000
    )Cash
      paid on acquisition of Pennsylvania School of Business, net of cash
      received of $11,768
    
    
    (658,232
    )
    
    -**Net
      cash used in investing activities**
    
    
    (1,311,611
    )
    
    (512,401
    )Cash
      flows from financing activities:Principal
      payments on capital lease obligation
    
    
    (83,717
    )
    
    (65,734
    )Principal
      payment on notes payable
    
    
    (82,691
    )
    
    (116,872
    )Proceeds
      from issuance of common stock
    
    
    -
    
    
    9,321,460Proceeds
      from exercise of options and warrants
    
    
    700,000
    
    
    278,323**Net
      cash provided by financing activities**
    
    
    533,592
    
    
    9,417,177Net
      increase (decrease) in cash and cash equivalents
    
    
    (575,883
    )
    
    10,394,910Cash
      and cash equivalents at beginning of period
    
    
    10,504,308
    
    
    2,522,107Cash
      and cash equivalents at end of period
    
    $
    9,928,425
    
    $
    12,917,017**Supplemental
      disclosures of cash flow information:**Cash
      paid during the period for:Interest
    
    $
    62,469
    
    $
    46,336Income
      taxes
    
    $
    557,792
    
    $
    239,268**Supplemental
      schedule of noncash investing and financing
      activities:**Capital
      lease obligations incurred in the acquisition of equipment
    
    $
    397,022
    
    $
    480,039




**See
Notes to Consolidated Financial Statements**
****


3





****


**Notes
to Consolidated Financial Statements**




**Note
1 - Business and Basis of Presentation**




The
accompanying consolidated financial statements include the accounts of EVCI
Career Colleges Holding Corp. and its wholly-owned subsidiaries, Interboro
Institute, Inc. (“Interboro”), Interboro Holding, Inc. and Pennsylvania School
of Business, Inc. (“PSB”). References to “we,” “our,” and “us” mean EVCI and its
subsidiaries unless the context requires otherwise. All intercompany balances
and transactions have been eliminated.





EVCI
provides on-campus career college education through subsidiaries.





*Interboro.* All of
our revenue for the first quarter of 2005 was generated by Interboro. Interboro
offers degree programs leading to the Associate in Occupational Studies degree
and Associate in Applied Sciences degree. It has a main campus in mid-town
Manhattan and an extension center in Flushing, New York and in the Washington
Heights section of Manhattan, New York. Interboro also has a college site in
Yonkers, New York. Each of these sites has an annex that became operational for
the fall semester 2004. We acquired Interboro in January 2000.





*PSB.* We
acquired PSB in January 2005 for $670,000 and changed its name from Information
Computer Systems, Inc. PSB is authorized to offer two Associate in Specialized
Business degree programs and two diploma programs in information technology as
well as three recently authorized business diploma programs. As permitted by the
Pennsylvania State Education Department, after six months of teaching the three
business diploma programs, PSB plans to seek authorization to award the
Associate in Special Business degree for those programs. PSB recently relocated
to downtown Allentown, Pennsylvania and is developing an advertising and
marketing campaign that will impact its fall 2005 enrollment.





The
accompanying unaudited interim consolidated financial statements reflect all
adjustments (consisting of normal recurring adjustments) which, in the opinion
of management, are necessary for a fair presentation of the results for the
periods shown. Our results from operations for the interim period are not
indicative of the results expected for the full fiscal year or any future period
and should be read in conjunction with our audited financial statements as of
December 31, 2004 and for the year then ended, and the notes thereto, in our
10-KSB for the year ended December 31, 2004.





There
have been no significant changes in our accounting policies since December 31,
2004. Certain amounts for 2004 have been reclassified to conform to the 2005
presentation.





**Note
2 - Earnings Per Share**





Statement
of Financial Accounting Standards (“SFAS”) No. 128, “Earnings per Share,”
requires dual presentation of basic earnings per share (“EPS”) and diluted EPS
on the financial statements for all entities with complex capital structures.
Basic EPS is computed as net earnings available to common stockholders divided
by the weighted-average number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution that could occur from common shares
issuable from potential common stock including stock options, warrants
and convertible securities. A reconciliation of shares used in calculating basic
and diluted earnings per share follows:








4





**Three
      months ended March 31,****2005**
    
    **2004**Basic
      weighted average number of common shares outstanding
    
    
    12,371,967
    
    
    10,946,801Effect
      of assumed exercise of outstanding options
    
    
    476,399
    
    
    421,502Effect
      of assumed exercise ofOutstanding
      warrants
    
    
    89,534
    
    
    296,719Diluted
      weighted average number of shares of common stock
    outstanding
    
    
    12,937,900
    
    
    11,665,022Options
      and warrants not included above*
    
    
    456,905
    
    
    162,338







*Not
included because their effect would be anti-dilutive.





**Note
3 -Revenue Recognition**





Interboro
recognizes revenue ratably during each semester on a daily basis over 70 week
days (including holidays). Revenue, to the extent it has not been earned, is
classified on our balance sheet under current liabilities as deferred tuition
revenue.





**Note
4 - Employee Stock Options**





During
the first quarter 2005, the following options were granted to employees and
independent directors:





**No.
      of Shares**
    
    **Exercise
      Price**600,000(1)
    
    $
    8.18530,000(2)
    
    $
    7.78





(1)
    Earned
      by our Chairman and our Chief Executive Officer and President as a result
      of an increase by more than 35% in EVCI’s diluted earnings per share for
      2004 over 2003.





(2)
    Automatic
      grants to our independent directors covering 7,500 shares each.





EVCI has
elected, in accordance with the provisions of SFAS No. 123, to apply the current
accounting rules under Opinion No. 25 and related interpretations in accounting
for stock options and, accordingly, is presenting the disclosure-only
information as required by SFAS No. 123. If EVCI had elected to recognize
compensation cost based on the fair value of the options granted at grant date
as prescribed by SFAS No. 123, EVCI’s net income and net income per common share
would approximate the pro forma amounts shown in the following
table:







5








**Three
      months ended March 31,****2005**
    
    **2004**Reported
      net income
    
    $
    666,997
    
    $
    2,094,441Add:
      stock-based employee compensation expense included in recorded net income,
      net of related tax effects
    
    
    100,992
    
    
    10,800Deduct:
      total stock-based employee compensation expense determined under
      fair-value based method for all awards, net of related tax
      effects
    
    
    (283,615
    )
    
    (57,648
    )Pro
      forma net income
    
    
    484,374
    
    
    2,047,593Reported
      net income per common share:Basic
    
    $
    0.05
    
    $
    0.19Diluted
    
    $
    0.05
    
    $
    0.18Pro
      forma net income per common share:Basic
    
    $
    0.04
    
    $
    0.19Diluted
    
    $
    0.04
    
    $
    0.18








The fair
value of options granted is estimated on the date of grant using the
Black-Scholes option-pricing model with the following assumptions: no dividend
yield, volatility of 62%, risk-free interest rates ranging from 3.25% to 3.75%
and an expected life of 3 to 5 years from the date of vesting. The estimate of
fair value is amortized over the option vesting period in determining the pro
forma impact.





**Note
5- Acquisition**





On
January 11, 2005, EVCI acquired for $670,000 the outstanding shares of
Information Computer Systems Inc., which subsequently changed its name to
Pennsylvania School of Business, Inc. Approximately $640,000 of the purchase
price has been allocated to the school’s authority to operate that has been
granted under state law and by its accrediting agency. This amount is reflected
on our balance sheet as an intangible asset and will be amortized on a straight
line basis over up to five years starting when class begins in the fall
2005.





**Item
2. Management’s Discussion and Analysis of Financial Condition and Results of** **Operations**





The
following information should be read in conjunction with Management’s Discussion
and Analysis of Financial Condition and Results of Operations and the financial
statements and notes thereto included in our 10-KSB for the year ended December
31, 2004, and in conjunction with the financial statements and notes thereto for
the three months ended March 31, 2005 and 2004, included in Item 1 of this
report. Numbers have been rounded and may be approximate. References in the
discussion to EVCI mean EVCI Career Colleges Holding Corp, unless the context
requires otherwise.








6





****


**Overview**





*First
Quarter Developments*





·
    Interboro’s
      full-time student enrollments for its spring semester increased to
      approximately 3,700 in 2005 from approximately 2,800 for the spring 2004
      semester, a 32% increase.





·
    Interboro
      leased an additional 4,500 square feet of space for classrooms that is an
      annex to Interboro’s main campus in Manhattan and that should be ready for
      use in September 2005.





·
    A
      program review was commenced by the U.S. Department of Education relating
      to Title IV grants made to Interboro students during Interboro’s academic
      years 2002/2003, 2003/2004 and 2004/2005.





Subsequent
to March 31, 2005, Interboro leased additional space for a new Flushing annex,
as reported in our form 8-K filed April 27, 2005.





*Revenue
Recognition*





Each
semester has 14 weeks, or 70 days, of classroom instruction. Final examinations
are given in the 15 th week of
the semester. Each week of classroom instruction during the semester includes
five days of revenue recognition. The first and last days of Interboro’s three
academic semesters usually vary from year to year and do not coincide with the
first and last days of EVCI’s calendar quarters. As a result, increases in
Interboro’s enrollment do not directly relate to increases in its revenue for
the first, second or third quarters. However, increases in Interboro’s
enrollment for all of the three semesters included in a calendar year directly
relate to increases in Interboro’s revenue for that calendar year.





The
spring 2005 semester began January 24, 2005 and Interboro had 49 days of revenue
recognition in the first quarter 2005. In contrast, the spring 2004 semester
started January 12, 2004 and Interboro had 58 days of revenue recognition in the
first quarter 2004 except with respect to Interboro’s Yonkers site, which only
had 16 days of revenue recognition, or $365,000 less revenue recognized.
Deferred revenue at March 31, 2005 includes $2,000,000 of revenue attributable
to the nine less days of recognized revenue in the first quarter 2005. The
spring 2005 semester was started late in order to give more students, who needed
more time to register, the ability to start their classes on time and,
accordingly, to further improve retention and graduation rates. Our total
deferred tuition revenue at March 31, 2005 of $4,371,132 will be recorded as
revenue in the second quarter of 2005.





In the
discussion on page 13 regarding the comparison of our net income for the first
quarters of 2005 and 2004, there is a table showing the calculation of the net
income and diluted net income per share that we would have had if the nine days
of additional revenue of $2,000,000 had been included in the first quarter 2005
and the costs of operating PSB had been excluded from the first quarter 2005.







7





*Capacity*





Our
current optimum capacity is 5,000 full-time students per semester without
increasing the number of weekend classes. Interboro’s optimum capacity can be
reached if there is full registration at all campus sites and all class rooms
are full for morning, afternoon and evening classes. To date, Interboro has not
achieved optimum capacity and believes it is not likely to do so in the
foreseeable future. Interboro’s reasonably achievable capacity, as opposed to
optimum capacity, currently and as expected for the fall 2005 semester
is:





**Current**
    
    **Expected*******Manhattan
      main campus
    
    
    2,200
    
    
    2,400Flushing
      extension center
    
    
    900
    
    
    1,300Washington
      Heights extension center
    
    
    800
    
    
    900Yonkers
      site
    
    
    350
    
    
    400Total
    
    
    4,250
    
    
    5,000


**





*Assumes
the new annex space in mid-town Manhattan and Flushing is built out by the start
of the fall 2005 semester and that current arrangements for space in Washington
Heights will be extended prior to the fall 2005 semester.





In an
increasingly difficult environment for obtaining space, Interboro is seeking
additional space in order to further increase its reasonably achievable capacity
at its mid-town Manhattan and Washington Heights sites. It is unlikely that
Interboro will be able to secure additional space for its mid-town Manhattan and
Washington Heights locations that will be ready for the fall 2005 semester.
Accordingly, it expects that its enrollment growth for 2005, as compared to
2004, will not exceed 30%.





*Marketing*





Marketing
costs are expensed as incurred. However, most of the revenue attributable to new
enrollments that result from marketing is not realized until after the start of
the semester in which the new enrollees first attend Interboro. A portion of
marketing costs result in enrollments


in later
semesters. The following table indicates each period when marketing costs are
incurred and the semester enrollments to which they mostly relate:





**Period**
    **Semester**June
      - September
    FallOctober
      - January
    SpringFebruary
      - May
    Summer








8







*Rate
of Growth*




We expect
that Interboro’s rate of growth will continue to exceed industry averages in
2005. Interboro‘s aggressive growth requires senior management personnel and
other resources to ensure that the quality of Interboro’s academic,
administrative and financial operations continues to strengthen. Interboro plans
to continue to increase its focus to improve its academic operations and to
improve its retention and graduation rates. We are always mindful of the
increasing level of scrutiny we are subject to as we continue to grow
aggressively.




*Title
IV program review*





On March
28, 2005, the U.S. Department of Education conducted an additional day of file
review as part of the ongoing Title IV program review. Based upon discussions at
that time with representatives of the DOE, Interboro believed that the Title IV
reviewers were going to review more files before submitting a draft report to
Interboro. However, as of May 11, 2005, the DOE had not requested more files.
Accordingly, Interboro cannot predict with certainty whether the DOE will ask
for additional files or, if it does, the extent of the DOE’s further review.
Interboro also cannot predict when it will receive the reviewers’ draft written
report or the timing and amount of Title IV refunds Interboro will be required
to make to the DOE.




*Seasonality*




Interboro’s
revenue varies as a result of changes in the level of its enrollments. Most
colleges and universities traditionally experience a greater seasonal increase
in enrollments for the fall semester over the spring semester in an academic
year (fall, spring and summer semesters). For each of Interboro’s academic years
ended June 30 of 2001-2004, spring semester enrollment has been greater than the
immediately preceding fall semester’s enrollment, due to our expansion and
progress in increasing retention of Interboro students. Enrollment during the
summer semester is traditionally significantly lower than the remainder of the
same academic year. As a result of these factors, total student enrollment and
net revenue are typically highest in our fourth and first quarters, which
include October through March.




**Comparison
of three months ended March 31, 2005 to three months ended March 31,
2004.**





The
following table summarizes our operating results as a percentage of
our total revenue for the first quarters of 2005 and 2004.





**Three
      Months Ended March 31,****2005**
    
    **2004**Total revenue
    
    
    100.0
    %
    
    100.0
    %Cost
      of revenue
    
    
    22.2
    
    
    17.3Selling,
      general and administrative expenses
    
    
    69.0
    
    
    53.1Total
      operating expenses
    
    
    91.2
    
    
    70.4Income
      before provision for income taxes
    
    
    8.4
    
    
    29.1Net
      income
    
    
    6.5
    
    
    24.7







9




Net
revenue for the first quarter 2005 increased 21%, or $1,737,000, to $10,130,000
from $8,393,000, for the first quarter 2004. Each of Interboro’s sites
contributed to the revenue increase: Manhattan $188,000, Flushing $321,000,
Washington Heights $725,000 and Yonkers $503,000.




Interboro’s
full-time student enrollment for its spring 2005 semester rose by 32% to 3,700
students from 2,800 students for its 2004 spring semester. However, revenue
recognized in the 2005 first quarter from spring enrollment was limited to 70%
of the revenue attributable to 2005 spring semester enrollments as compared to
79% a year ago. Additional revenue of $2,000,000 would have been recognized if
Interboro had not had nine less days of revenue recognition than for its spring
2004 first quarter. The effect this additional revenue could have had on our
2005 first quarter is shown on page 13.





The 2005
first quarter’s revenue was positively affected by tuition increases, commencing
with the fall 2004 semester, from $3,900 to $4,100 per semester for all programs
except ophthalmic dispensing, and from $4,100 to $4,200 for ophthalmic
dispensing.





Interboro
granted partial scholarships totaling approximately $388,000 in the first
quarter 2005 to continuing students in good academic standing and to certain new
students. These students would not otherwise have been able to attend Interboro.
The effect of the scholarships is to reduce first quarter revenue by $271,000
and second quarter revenue by $117,000. The scholarships permitted Interboro to
further improve its retention rates and receive the maximum TAP and Pell grants
to which these individual students are entitled.




PSB has
not had revenue since it was acquired by us in January 2005 as a result of the
subsequent relocation of its campus and compliance with regulatory requirements
relating to its acquisition by us.





Cost of
revenue increased 54% or $793,000, to $2,265,000, in the first quarter 2005 from
$1,472,000 for the first quarter 2004. Most all of the increase is attributable
to the addition, from March 31, 2004 to March 31, 2005, of  Interboro
faculty and admissions personnel. In addition, Interboro hired a higher
percentage than usual of full-time faculty in the first quarter 2005 in order to
help increase its retention and graduation rates and to accommodate up to a 40%
enrollment growth rate for its spring semester 2005 over its spring semester
2004. By job description, the number of personnel added since March 31, 2004
were:





**March
      31,****2005**
    
    **2004**Adjunct
      instructors
    
    
    124
    
    
    95Full-time
      instructors
    
    
    69
    
    
    36Part-time
      tutors
    
    
    34
    
    
    27Admissions
      staff
    
    
    42
    
    
    14Deans
      and staff
    
    
    20
    
    
    16Librarians
    
    
    9
    
    
    7Total
    
    
    298
    
    
    195





Our
instructors include developmental specialists who provide additional instruction
in our continuing effort to increase retention and graduation rates. Interboro
increased its full time instructors by 33 in the first quarter 2005.








10





As a
result of personnel and salary increases made to support Interboro’s academic
and administrative growth, salaries made up 32% of the cost of revenue in the
first quarter of 2005 and 26% of the cost of revenue in the first quarter of
2004. Interboro’s decision to compete for more seasoned and qualified personnel
required that salary levels be increased for these new hires. If the spring 2005
semester had nine more days of revenue recognition, our 2005 first quarter cost
of revenue would have been 26% of our total revenue.





In
addition, cost of revenue also included $42,000 of cost incurred by
PSB.





The
following table sets forth our selling, general and administrative expenses, as
a percentage of our total revenue for the first quarters of 2005 and
2004:





**Three
      months ended March 31,****2005*******
    
    **2004**Salaries
      and benefits
    
    
    31.6
    
    
    25.9Marketing
    
    
    8.8
    
    
    8.4Depreciation
    
    
    4.1
    
    
    1.9Other
      expenses
    
    
    20.5
    
    
    15.1Non
      cash compensation
    
    
    1.0
    
    
    0.1Professional
      fees
    
    
    3.0
    
    
    1.7Total
    
    
    69.0
    
    
    53.1





*Includes $90,000 of cost incurred by PSB.





Selling,
general and administrative expenses would have been 58% of total revenue for the
2005 first quarter, if the 2005 spring semester had nine more days of revenue
recognition.





Salaries
and benefits increased by 47%, or $1,024,000, to $3,224,000, for the first
quarter 2005 from $2,200,000 for the first quarter 2004. All employee costs that
are not included in cost of revenue are included in this category, including
benefit costs for all of our employees. Substantially all of the increase in
these costs is attributable to the addition, from March 31, 2004 to March 31,
2005, of personnel whose salaries and benefits are included in selling, general
and administrative expenses. This is an addition to the salaries of the
personnel that are included in cost of revenue.





The
increase in salaries and benefits resulted, in significant part, from hiring
personnel needed to support Interboro’s growth. It also resulted from increases
in salary levels that were made to attract and retain more seasoned and
qualified personnel. In addition, there was $150,000 of increases in the
salaries of EVCI’s executive officers that were retroactive to January 1, 2005.
Salaries and benefits would have been 26% of our total revenue if the 2005
spring semester had nine more days of revenue recognition.





11





The table
below summarizes changes in salaries and wages.





**Three
      months ended March 31,****2005**
    
    **2004**Wages
    
    $
    2,391,000
    
    $
    1,701,000Employees
      benefits
    
    
    257,000
    
    
    172,000Payroll
      taxes
    
    
    576,000
    
    
    327,000Total
    
    $
    3,224,000
    
    $
    2,200,000





Marketing
costs increased by $187,000 to $896,000 for the first quarter 2005 from $709,000
for the first quarter 2004. These costs are mostly for newspaper and subway
advertising and telemarketing. We also market using direct mail and promotional
items.





Professional
fees and consulting fees increased by $166,000 to $310,000 for the first quarter
2005, from $144,000 for the first quarter 2004. This is primarily due to
increases in legal and architectural fees of $70,000 relating to new leases,
fees paid to directors of $30,000 for attending additional board and committee
meetings and $25,000 for costs relating to our compliance with Section 404 of
Sarbanes Oxley Act of 2002. We anticipate we will have significant additional
expense for 2005 relating to our compliance with Sarbanes-Oxley.





Non cash
compensation was $101,000 for the first quarter 2005 as compared to $11,000 for
the first quarter 2004 This increase primarily results from $92,000 of expense
of option grants to three of our executive officers to purchase 181,131 shares
of EVCI’s common stock at $4.70 per share that were approved at our stockholders
meeting held July 27, 2004. We will record additional expense for each of our
remaining quarters of 2005 and 2006, or a total of $363,000 for each of 2005 and
2006.





Depreciation
and amortization increased by $248,000 to $413,000 for the first quarter 2005
from $165,000 for the first quarter 2004. The increase is primarily due to our
investment in property and equipment of $4.0 million in 2004 to support our
growth.





As a
result of our growth, other expenses increased by $816,000, or 64%, to
$2,090,000 for first quarter 2005 from $1,274,000 for first quarter 2004.
Approximately, 91% in 2005 and 84% in 2004 of these other expenses consisted of
the following:








12





**Three
      months ended March 31,****2005**
    
    **2004**Rent
      and utilities
    
    $
    766,000
    
    $
    523,000Outside
      security(1)
    
    
    259,000
    
    
    --Bad
      debt expense
    
    
    200,000
    
    
    --Insurance
    
    
    140,000
    
    
    93,000Equipment
      rental expense
    
    
    64,000
    
    
    39,000Telephone
      and internet
    
    
    200,000
    
    
    162,000Supplies
    
    
    110,000
    
    
    119,000Travel
      and entertainment
    
    
    46,000
    
    
    60,000Investor
      relations
    
    
    101,000
    
    
    36,000Sales
      and miscellaneous taxes
    
    
    19,000
    
    
    39,000$
    1,905,000
    
    $
    1,071,000








(1) In
September 2004 Interboro began outsourcing its security services.





Net
income decreased by $1,427,000 to $667,000 for the first quarter 2005 from
$2,094,000 for the same quarter 2004. If w e had
been able to recognize an additional nine days of revenue and did not have the
costs of operating PSB, the adjustments to net income and diluted income per
common share for the first quarter 2005 would be as follows:





Net
      income as reported
    
    $
    667,000Add:Additional
      revenue(1)
    
    
    1,850,000PSB
      costs
    
    
    132,0002,649,000Deduct:Assumed
      tax on additional revenue
    
    
    (315,000
    )Adjusted
      net income
    
    $
    2,334,000Adjusted
      diluted net income per common share(2)
    
    $
    0.18











(1)
    After
      deducting salaries of $150,000 of adjunct instructors that are a variable
      cost directlyrelated
      to this revenue.


(2)
    Based
      on 12,937,900 weighted average number of common shares outstanding versus
      11,665,022 weighted average number of shares outstanding for first quarter
      2004.





The
adjusted net income and diluted net income per common share amounts set forth
above are non-GAAP financial measures that should not be considered as an
alternative to net income and net income per common share as indicators of
operating performance. Management believes this information is of interest to
investors as a supplemental measure of EVCI’s operating performance,
particularly in light of the significant difference in the number of semester
days during each fiscal quarter.








13


****


**Liquidity
and capital resources**





Our
sources and uses of funds during the first quarter 2005 and our cash balances on
January 1, and March 31, 2005 are summarized below:





**Sources:**Cash
      collections from operations
    
    $
    10,383,000Proceeds
      from exercises of options and warrants
    
    
    700,000$
    11,083,000**Uses:**Payment
      of operating expenses
    
    
    10,047,000Deposits
      required
    
    
    151,000Payment
      of notes payable
    
    
    83,000Payment
      of principle of capital leases
    
    
    84,000Purchase
      of property and equipment
    
    
    655,000Payment
      of purchase price for PSB
    
    
    639,00011,659,000Net
      decrease in cash
    
    
    (576,000
    )Cash
      on hand at December 31, 2004
    
    
    10,504,000Cash
      on hand at March 31, 2005
    
    $
    9,928,000





Of our
$9,200,000 of accounts receivable at March 31, 2005, we collected $3,008,000 by
May 10, 2005. We expect to collect another $1,085,000 by June 30, 2005.
Interboro has been notified by the Higher Education Services Corporation that
the TAP deferral of $2,749,000 relating to our spring 2005 semester will be made
to Interboro by August 1, 2005. Another $1,000,000 of TAP grants is expected to
be collected in October 2005. Interboro also expects to collect
substantially all of the $1,350,000 owed by students on payment plans by March
31, 2006.





Our cash
generated from operations and cash on hand will be sufficient to satisfy our
cash needs for 2005. Nevertheless, management may decide to incur indebtedness
or raise additional equity for expansion internally or by acquisition.





**Forward-looking
statements and risk factors**





Statements
and financial discussion and analysis by our management contained in this 10-Q
that are not historical facts are forward-looking statements. They reflect
management’s current views with respect to future events and, accordingly, are
subject to certain assumptions, risks and uncertainties, including the risk
factors discussed below. Those risk factors supplement or modify the more
detailed risk factors included in our Form 10-KSB for the year ended December
31, 2004. If any of the following or other risks actually occurs, or should our
assumptions prove incorrect, actual results may vary materially from those
anticipated by those


forward-looking
statements. Furthermore, our business, financial condition and results of
operations could be materially and adversely affected.





·
    Interboro
      Institute’s failure to comply with extensive federal and New York State
      regulations could have a material adverse impact on its ability to operate
      and grow.






14




·
    Adverse
      changes in the rules governing, or the amount or timing of, TAP
      disbursements could materially impede Interboro’s ability to operate.




·
    Adverse
      changes in the rules governing, or the amount or timing of, Pell program
      disbursements could materially impede Interboro’s ability to
      operate.





·
    An
      ongoing or future Title IV program review could result in Interboro being
      required to make material refunds of Pell grants and EVCI being required
      to reduce its income by the amount of those refunds.





·
    A
      future TAP audit could result in Interboro being required to make material
      refunds of TAP grants and EVCI being required to reduce its income by the
      full amount of those refunds.




·
    Changes
      in Ability to Benefit regulations could materially and adversely affect
      Interboro’s ability to operate and grow.




·
    Interboro’s
      aggressive growth has attracted significant attention that could result in
      higher regulatory scrutiny and media coverage that could have an adverse
      affect on us and our stock price.




·
    If
      the New York State Education Department does not give Interboro the
      requisite approval to open new college sites or to receive extension
      center status for its Yonkers site, Interboro’s operations and growth
      could be adversely affected.




·
    If
      Interboro is unable to continue to improve its retention and graduation
      rates, the New York State Education Department may seek to limit its
      operations and growth and may even seek to have the Board of Regents deny
      or adversely condition Interboro’s
reaccredidation.




·
    If
      Interboro is unable to obtain additional or replacement space, Interboro’s
      internal growth rate will be materially
limited.




·
    If
      the maximum Title IV and TAP grants do not increase over time, our margins
      and, eventually, our ability to operate without participating in Title IV
      loan programs could be adversely affected.





·
    Interboro’s
      failure to effectively open and operate new college sites, or annexes to
      existing sites, could adversely affect our
business.




·
    The
      seasonality of Interboro’s enrollments is expected to produce significant
      variations in our results from quarter to
quarter.





·
    The
      loss of the services of key management personnel of EVCI or Interboro,
      could have a material adverse effect on our operations and growth.





·
    If
      Interboro is unable to compete effectively for the additional management
      personnel that it needs to competently handle its growth, Interboro’s
      operations, regulatory compliance and financial results could be adversely
      affected.






15




·
    Our
      failure to effectively manage our aggressive enrollment growth could hurt
      our business.




·
    Our
      business and results could materially suffer if we improperly balance or
      divert resources from our operations to making acquisitions or if we make
      acquisitions that do not meet our expectations.






·
    Threatened
      or actual legal proceedings against Interboro by regulatory agencies or
      private parties could have a material adverse effect on our business.




·
    If
      the operation of Interboro’s computer system is adversely affected by
      computer viruses that are not recognized by available anti-virus software,
      or for any other reason, its ability to operate could be severely
      impaired.





·
    Terrorist
      activity, or the threat of it, in the New York Metropolitan area could
      adversely affect Interboro.




·
    Interboro’s
      inability to foster and maintain relationships with community
      organizations in the communities where its college sites are located could
      adversely affect those sites.




·
    PSB
      may not become fully operational by the fall of 2005 because of
      construction delays.
  ·
    PSB's
      lack of experience with Pennsylvania grant programs could prevent its
      students from obtaining grants and, as a result, adversely affect PSB's
      enrollment and revenue.


·
    A
      change of control of EVCI would adversely affect Interboro’s receipt of
      Pell and TAP funds.




·
    A
      change of control of EVCI would cause regulatory and accrediting
      authorities to return Interboro to a probationary
  status.




·
    Future
      changes in ownership of our common stock could substantially limit the
      utilization of our net operating loss
carryforwards.




·
    Actual
      or potential future sales of shares of our common stock by management
      could have an adverse effect on the market price of our common
      stock.




·
    Our
      share price has ranged greatly since we went public and may be very
      volatile in the future.




·
    Provisions
      of laws or regulations, our certificate of incorporation and by-laws and
      agreements with our executive officers could discourage takeover attempts
      and other investments in our common stock.




·
    Our
      classified board limits stockholder voting for election and removal of
      directors.





·
    Indemnification
      and limitation of liability of our officers and directors may insulate
      them from accountability to stockholders at substantial cost to
      us.






16





**Item
4. Controls and Procedures**





(a)  Our
management, including our chief executive officer and president and our chief
financial officer, have conducted an evaluation of the effectiveness of our
disclosure controls and procedures (as defined in Rule 13a-14(c) under the
Securities Exchange Act of 1934) as of March 31, 2005. Based upon that
evaluation, our chief executive officer and president and our chief financial
officer have concluded that our disclosure controls and procedures are effective
for timely gathering, analyzing and disclosing the information we
are


required
to disclose in our reports filed under the Exchange Act. Management is
implementing plans, however, to improve the segregation of duties within our
financial and administrative functions. In the first quarter the implementation
included:





·
    hiring
      two senior technology personnel for
Interboro




·
    recruiting
      candidates for two positions in Interboro’s accounting department




·
    retaining
      a consulting firm, that will commence field work in May 2005, to assist in
      our compliance with Section 404 of the Sarbanes-Oxley Act of 2004.




Otherwise,
there have been no significant changes made in our internal controls or in other
factors that could significantly affect our internal controls subsequent to that
evaluation date. We are continuing to evaluate the employees involved and the
control procedures in place as well as the costs and benefits of making changes
in the number and duties of employees. We will also continue working to document
controls this year and to identify other items that might require remediation in
connection with our compliance with Section 404 of the Sarbanes-Oxley Act of
2002.







**PART
II**





**OTHER
INFORMATION**





**Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds**





In the
2005 first quarter, EVCI issued 100,000 shares of common stock for $700,000 upon
exercise of options at $7.00 per share. The proceeds were used for working
capital. The shares were issued to a sophisticated investor and, accordingly,
are exempt from registration under the Securities Act of 1933 pursuant to
Section 4(2) of that Act.





17





**Item
6. Exhibits**





The
following exhibits are filed as part of this report.





Exhibit
      No.*
    Description
      of Exhibit3.1[1]
      --
    Certificate
      of Incorporation of the Registrant.3.2[1]
      --
    Certificate
      of Merger of Educational Video Conferencing, Inc. (a New York Corporation)
      into the Registrant (a Delaware Corporation).3.3[1]
      --
    Certificate
      of Correction of the Certificate of Incorporation of the
      Registrant.3.4[3]--
    Certificate
      of Amendment, dated February 22, 1999, to Certificate of Incorporation of
      the Registrant.3.5**
      --
    Amended
      and Restated By-Laws of the Registrant.3.6[5]
      --
    Certificate
      Eliminating Reference to Series A 7.5% Convertible Preferred Stock from
      the Certificate of Incorporation of the Registrant.3.7[16]
      --
    Certificate
      of Amendment, dated May 23, 2002, to Certificate of Incorporation of the
      Registrant.3.8[5]
      --
    Certificate
      Eliminating Reference to Series B 7% Convertible Preferred stock from the
      Certificate of Incorporation of the Registrant.3.9[5]
      --
    Certificate
      Eliminating Reference to Series C 8% Convertible Preferred stock from the
      Certificate of Incorporation of the Registrant.3.10[20]
      --
    Certificate
      of Amendment, filed August 9, 2004, to Certificate of Incorporation of the
      Registrant.4.2[2]
      --
    Form
      of Common Stock certificate.4.3[4]
      --
    Warrant
      Agreement, dated January 14, 2000, between the Registrant and Bruce. R.
      Kalisch.4.4[6]
      --
    Warrant
      Agreement, dated April 18, 2000, between the Registrant and Peter J.
      Solomon Company Limited.4.5[7]
      --
    Form
      of Warrant issued to each seller of shares of ICTS,
Inc.4.6[14]
      --
    Common
      Stock Purchase Warrant issued in September 2003, to purchase 45,000 shares
      of the Registrant’s common stock.4.7[17]
      --
    Common
      Stock Purchase Warrant issued to placement agent on March 29,
      2004.
   18
  10.1[9]
      --
    Employment
      Agreement between the Registrant and Dr. Arol I. Buntzman, dated January
      1, 2003.10.2[9]
      --
    Employment
      Agreement between the Registrant and Dr. John J. McGrath, Dated January 1,
      2003.10.3[9]
      --
    Employment
      Agreement between the Registrant and Richard Goldenberg, dated January 1,
      2003.10.4[10]
      --
    Amended
      and Restated 1998 Incentive Stock Option Plan of the
      Registrant.10.5[11]
      --
    2001
      Non-Qualified Stock Option Plan.10.6[9]
      --
    Form
      of Change in Control Agreement used for agreements the Registrant has with
      each of Dr. Arol I. Buntzman, Dr. John J. McGrath, and Richard Goldenberg,
      dated February 11, 2003.10.7[1]
      --
    Form
      of Indemnification Agreement.10.8[4]
      --
    Stock
      Purchase Agreement, dated January 14, 2000, among Bruce R. Kalisch,
      Interboro Holding, Inc. and Interboro Institute, Inc.10.9[12]
      --
    Lease
      Agreement between 444 Realty Company and Interboro Institute, Inc. dated
      July 27, 1983, as amended by agreements dated September 20, 1988,
      September 1, 1992, and February 1, 1993.10.10[12]
      --
    Lease
      Agreement between Interboro Institute, Inc. JUYI, Inc., dated January 26,
      2001.10.11[8]
      --
    Promissory
      Note for $1,000,000, dated August 4, 2003, payable by Interboro Institute,
      Inc. to North Fork Bank.10.12[8]
      --
    Form
      of the Registrant’s Subscription and Registration Rights Agreement
      relating to the Registrant’s August 1, 2003, issuance of common stock and
      warrants.10.13[13]
      --
    Settlement
      Agreement made October 3, 2003, between Amaranth Trading L.L.C. and the
      Registrant.10.14[13]
      --
    Form
      of Share Claim Purchase and Registration Rights Agreement between the
      Registrant and each investor acquiring a portion of the Amaranth Trading
      L.L.C.’s rights to claims to shares of EVCI’s common stock upon conversion
      of Series B Preferred shares.10.15[14]
      --
    Third
      Amendment and Lease Extension Agreement, made as of August 1, 2003,
      between 444 Realty Company, L.L.C. and Interboro Institute,
      Inc.10.16[15]
      --
    Ownership
      and Registration Rights Agreement, dated November 11, 2003, between the
      Registrant and JLF Partners I, L.P., JLF Partners II, L.P. and JLF
      Offshore Fund.
   19
  10.17[16]
      --
    Employment
      Agreement between the Registrant and Joseph D. Alperin dated January 1,
      2004.10.18[16]
      --
    Option
      Agreement between the Registrant and Joseph D. Alperin dated January 1,
      2004.10.19[16]
      --
    Change
      of control letter agreement between the Registrant and Joseph D. Alperin
      dated January 1, 2004.10.20[16]
      --
    Agreement,
      made February 28, 2004, between Interboro Institute, Inc. and OPEIU Local
      153, AFL-CIO.10.21[17]
      --
    Securities
      Purchase Agreement, dated March 29, 2004, by and among the Registrant and
      each buyer named in the Schedule of Buyers.10.22[17]
      --
    Registration
      Rights Agreement, dated March 29, 2004, by and among the Registrant and
      each buyer named in the Schedule of Buyers.10.23[18]
      --
    Ownership
      and Registration Rights Agreement, dated April 2, 2004, by and among the
      Registrant and six funds managed by Wellington Management Company,
      LLP.10.24[19]
      --
    2004
      Amended and Restated Incentive Stock Plan10.25[20]
      --
    Form
      of Stock Option Agreement (Nonqualified Stock Option)10.26[20]
      --
    Form
      of Stock Option Agreement (Nonqualified Stock Option) covering option
      grants to executive officers that were approved at the Registrant’s July
      27, 2004 stockholders meeting.10.27[21]
      --
    Lease
      made November 17, 2003 between Spruce Spires Associates, LP, and Interboro
      Institute, Inc.10.28
      (a)[22] --
    Sublease
      for Premises at 37-02 Main Street, Flushing, NY 11354, dated March 28,
      2005, between Genking, LLC and Interboro Institute, Inc. withExhibit
      A and letter agreement, dated April 15, 2005, amending such sublease.10.28
      (b)[22] --
    Consent
      to Sublease, dated April 22, 2005, among Mehran Enterprises Ltd., Futurama
      Home Furniture of Queens, Inc., Genking, LLC and Interboro Institute,
      Inc.10.28
      (c)[22] --
    Sublease,
      dated March 30, 2004, between Futurama Home Furniture of Queens, Inc. and
      Genking, LLC.10.28
      (d)[22] --
    Agreement
      of Lease, dated March 6, 2001, between Mehran Enterprise Ltd. and Futurama
      Home Furniture of Queens, Inc.
   20
  10.29
      --
    Intentionally
      omitted.10.30**
      --
    Letter
      agreement, dated March 31, 2005, amending Employment Agreement between the
      Registrant and Dr. Arol I. Buntzman dated January 1,
  2003.10.31**
      --
    Letter
      agreement, dated March 31, 2005, amending Employment Agreement between the
      Registrant and Dr. John J. McGrath dated January 1,
  2003.10.32**
      --
    Letter
      agreement, dated March 31, 2005, amending Employment Agreement between the
      Registrant and Richard Goldenberg dated January 1,
2003.10.33**
      --
    Letter
      agreement, dated March 31, 2005, amending Employment Agreement between the
      Registrant and Joseph D. Alperin dated January 1, 2004.31.1**
      --
    Certification
      of Chief Executive Officer required by Rule 13a-14(a) under the Exchange
      Act.31.2**
      --
    Certification
      of Chief Financial Officer required by Rule 13a-14(a) under the Exchange
      Act.32.1**
      --
    Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of Sarbanes-Oxley Act of 2002.32.2**
      --
    Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of Sarbanes-Oxley Act of 2002.99.1[21]
      --
    Text
      of final report, dated March 7, 2005, detailing the calculation of the TAP
      disallowances resulting from the TAP audit of the 2000-01 through 2002-03
      academic years of Interboro Institute,
Inc.


___________________





* Numbers
inside brackets indicate documents from which exhibits have been incorporated by
reference.





** Filed
herewith.





[1]
    Incorporated
      by reference to the Registrant’s Registration Statement on Form SB-2,
      filed October 23, 1998, Registration No.
333-66085.





[2]
    Incorporated
      by reference to Amendment No. 4, dated February 10, 1999, to the
      Registrant’s Form SB-2, Registration No.
333-66085.




[3]
    Incorporated
      by reference to Registrant’s Form 10-QSB for the quarter ended September
      30, 1999.





[4]
    Incorporated
      by reference to the Registrant’s Form 8-K dated January 14,
      2000.





[5]
    Incorporated
      by reference to the Registrant’s Form 8-K dated October 6,
      2000.





[6]
    Incorporated
      by reference to the Registrant’s Form 10-QSB for the quarter ended
      September 30, 2000.






21





[7]
    Incorporated
      by reference to the Registrant’s Form 8-K dated July 1,
    2001.





[8]
    Incorporated
      by reference to the Registrant’s Form 10-QSB for the quarter ended
      September 30, 2003.





[9]
    Incorporated
      by reference to the Registrant’s Form 10-KSB for the year ended December
      31, 2002.





[10]
    Incorporated
      by reference to the Registrant’s Registration Statement on Form S-8 filed
      December 31, 2002, Registration No.
333-102310.





[11]
    Incorporated
      by reference to the Registrant’s Registration Statement on Form S-8 filed
      October 23, 2001, Registration No.
333-72080.





[12]
    Incorporated
      by reference to the Registrant’s Form 10-QSB for the quarter ended
      September 30, 2003.





[13]
    Incorporated
      by reference to the Registrant’s Form 8-K dated October 10,
      2003.





[14]
    Incorporated
      by reference to the Registrant’s Form 10-QSB for the quarter ended
      September 30, 2003.





[15]
    Incorporated
      by reference to Amendment No. 1 to the Registrant’s Registration Statement
      on Form S-3, filed December 4, 2003, Registration No.
      333-110567.





[16]
    Incorporated
      by reference to the Registrant’s Form 10-KSB/A for the year ended December
      31, 2003.





[17]
    Incorporated
      by reference to the Registrant’s Form 8-K dated March 29,
      2004.





[18]
    Incorporated
      by reference to the Registrant’s Form 10-QSB for the quarter ended March
      31, 2004.





[19]
    Incorporated
      by reference to the Registrant’s Form 8-K dated September 17,
      2004.





[20]
    Incorporated
      by reference to the Registrant’s Form 10-QSB for the quarter ended
      September 30, 2004.




[21]
    Incorporated
      by reference to the Registrant’s Form 10-KSB for the year ended December
      31, 2004.





[22]
    Incorporated
      by reference to the Registrant’s Form 8-K dated March 7, 2005.








22




**SIGNATURES**





In
accordance with the requirements of the Exchange Act, the issuer caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.








EVCI CAREER COLLEGES
      HOLDING CORP.Date: May 12, 2005
    By:
    /s/ Richard
    GoldenbergRichard Goldenberg
      Chief Financial Officer(Principal Financial and
      Accounting Officer)







23








**EXHIBIT
INDEX**





Exhibit
      No.*
    Description
      of Exhibit3.1[1]
      --
    Certificate
      of Incorporation of the Registrant.3.2[1]
      --
    Certificate
      of Merger of Educational Video Conferencing, Inc. (a New York Corporation)
      into the Registrant (a Delaware Corporation).3.3[1]
      --
    Certificate
      of Correction of the Certificate of Incorporation of the
      Registrant.3.4[3]--
    Certificate
      of Amendment, dated February 22, 1999, to Certificate of Incorporation of
      the Registrant.3.5**
      --
    Amended
      and Restated By-Laws of the Registrant.3.6[5]
      --
    Certificate
      Eliminating Reference to Series A 7.5% Convertible Preferred Stock from
      the Certificate of Incorporation of the Registrant.3.7[16]
      --
    Certificate
      of Amendment, dated May 23, 2002, to Certificate of Incorporation of the
      Registrant.3.8[5]
      --
    Certificate
      Eliminating Reference to Series B 7% Convertible Preferred stock from the
      Certificate of Incorporation of the Registrant.3.9[5]
      --
    Certificate
      Eliminating Reference to Series C 8% Convertible Preferred stock from the
      Certificate of Incorporation of the Registrant.3.10[20]
      --
    Certificate
      of Amendment, filed August 9, 2004, to Certificate of Incorporation of the
      Registrant.4.2[2]
      --
    Form
      of Common Stock certificate.4.3[4]
      --
    Warrant
      Agreement, dated January 14, 2000, between the Registrant and Bruce. R.
      Kalisch.4.4[6]
      --
    Warrant
      Agreement, dated April 18, 2000, between the Registrant and Peter J.
      Solomon Company Limited.4.5[7]
      --
    Form
      of Warrant issued to each seller of shares of ICTS,
Inc.4.6[14]
      --
    Common
      Stock Purchase Warrant issued in September 2003, to purchase 45,000 shares
      of the Registrant’s common stock.4.7[17]
      --
    Common
      Stock Purchase Warrant issued to placement agent on March 29,
      2004.10.1[9]
      --
    Employment
      Agreement between the Registrant and Dr. Arol I. Buntzman, dated January
      1, 2003.
   24
  10.2[9]
      --
    Employment
      Agreement between the Registrant and Dr. John J. McGrath, Dated January 1,
      2003.10.3[9]
      --
    Employment
      Agreement between the Registrant and Richard Goldenberg, dated January 1,
      2003.10.4[10]
      --
    Amended
      and Restated 1998 Incentive Stock Option Plan of the
      Registrant.10.5[11]
      --
    2001
      Non-Qualified Stock Option Plan.10.6[9]
      --
    Form
      of Change in Control Agreement used for agreements the Registrant has with
      each of Dr. Arol I. Buntzman, Dr. John J. McGrath, and Richard Goldenberg,
      dated February 11, 2003.10.7[1]
      --
    Form
      of Indemnification Agreement.10.8[4]
      --
    Stock
      Purchase Agreement, dated January 14, 2000, among Bruce R. Kalisch,
      Interboro Holding, Inc. and Interboro Institute, Inc.10.9[12]
      --
    Lease
      Agreement between 444 Realty Company and Interboro Institute, Inc. dated
      July 27, 1983, as amended by agreements dated September 20, 1988,
      September 1, 1992, and February 1, 1993.10.10[12]
      --
    Lease
      Agreement between Interboro Institute, Inc. JUYI, Inc., dated January 26,
      2001.10.11[8]
      --
    Promissory
      Note for $1,000,000, dated August 4, 2003, payable by Interboro Institute,
      Inc. to North Fork Bank.10.12[8]
      --
    Form
      of the Registrant’s Subscription and Registration Rights Agreement
      relating to the Registrant’s August 1, 2003, issuance of common stock and
      warrants.10.13[13]
      --
    Settlement
      Agreement made October 3, 2003, between Amaranth Trading L.L.C. and the
      Registrant.10.14[13]
      --
    Form
      of Share Claim Purchase and Registration Rights Agreement between the
      Registrant and each investor acquiring a portion of the Amaranth Trading
      L.L.C.’s rights to claims to shares of EVCI’s common stock upon conversion
      of Series B Preferred shares.10.15[14]
      --
    Third
      Amendment and Lease Extension Agreement, made as of August 1, 2003,
      between 444 Realty Company, L.L.C. and Interboro Institute,
      Inc.10.16[15]
      --
    Ownership
      and Registration Rights Agreement, dated November 11, 2003, between the
      Registrant and JLF Partners I, L.P., JLF Partners II, L.P. and JLF
      Offshore Fund.
   25
  10.17[16]
      --
    Employment
      Agreement between the Registrant and Joseph D. Alperin dated January 1,
      2004.10.18[16]
      --
    Option
      Agreement between the Registrant and Joseph D. Alperin dated January 1,
      2004.10.19[16]
      --
    Change
      of control letter agreement between the Registrant and Joseph D. Alperin
      dated January 1, 2004.10.20[16]
      --
    Agreement,
      made February 28, 2004, between Interboro Institute, Inc. and OPEIU Local
      153, AFL-CIO.10.21[17]
      --
    Securities
      Purchase Agreement, dated March 29, 2004, by and among the Registrant and
      each buyer named in the Schedule of Buyers.10.22[17]
      --
    Registration
      Rights Agreement, dated March 29, 2004, by and among the Registrant and
      each buyer named in the Schedule of Buyers.10.23[18]
      --
    Ownership
      and Registration Rights Agreement, dated April 2, 2004, by and among the
      Registrant and six funds managed by Wellington Management Company,
      LLP.10.24[19]
      --
    2004
      Amended and Restated Incentive Stock Plan10.25[20]
      --
    Form
      of Stock Option Agreement (Nonqualified Stock Option)10.26[20]
      --
    Form
      of Stock Option Agreement (Nonqualified Stock Option) covering option
      grants to executive officers that were approved at the Registrant’s July
      27, 2004 stockholders meeting.10.27[21]
      --
    Lease
      made November 17, 2003 between Spruce Spires Associates, LP, and Interboro
      Institute, Inc.10.28
      (a)[22] --
    Sublease
      for Premises at 37-02 Main Street, Flushing, NY 11354, dated March 28,
      2005, between Genking, LLC and Interboro Institute, Inc. withExhibit
      A and letter agreement, dated April 15, 2005, amending such sublease.10.28
      (b)[22] --
    Consent
      to Sublease, dated April 22, 2005, among Mehran Enterprises Ltd., Futurama
      Home Furniture of Queens, Inc., Genking, LLC and Interboro Institute,
      Inc.10.28
      (c)[22] --
    Sublease,
      dated March 30, 2004, between Futurama Home Furniture of Queens, Inc. and
      Genking, LLC.10.28
      (d)[22] --
    Agreement
      of Lease, dated March 6, 2001, between Mehran Enterprise Ltd. and Futurama
      Home Furniture of Queens, Inc.10.29
--
    Intentionally
      omitted.10.30**
      --
    Letter
      agreement, dated March 31, 2005, amending Employment Agreement between the
      Registrant and Dr. Arol I. Buntzman dated January 1,
  2003.
   26
  10.31**
      --
    Letter
      agreement, dated March 31, 2005, amending Employment Agreement between the
      Registrant and Dr. John J. McGrath dated January 1,
  2003.10.32**
      --
    Letter
      agreement, dated March 31, 2005, amending Employment Agreement between the
      Registrant and Richard Goldenberg dated January 1,
2003.10.33**
      --
    Letter
      agreement, dated March 31, 2005, amending Employment Agreement between the
      Registrant and Joseph D. Alperin dated January 1, 2004.31.1**
      --
    Certification
      of Chief Executive Officer required by Rule 13a-14(a) under the Exchange
      Act.31.2**
      --
    Certification
      of Chief Financial Officer required by Rule 13a-14(a) under the Exchange
      Act.32.1**
      --
    Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of Sarbanes-Oxley Act of 2002.32.2**
      --
    Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of Sarbanes-Oxley Act of 2002.99.1[21]
      --
    Text
      of final report, dated March 7, 2005, detailing the calculation of the TAP
      disallowances resulting from the TAP audit of the 2000-01 through 2002-03
      academic years of Interboro Institute,
Inc.











* Numbers
inside brackets indicate documents from which exhibits have been incorporated by
reference.


** Filed
herewith.





[1]
    Incorporated
      by reference to the Registrant’s Registration Statement on Form SB-2,
      filed October 23, 1998, Registration No.
333-66085.





[2]
    Incorporated
      by reference to Amendment No. 4, dated February 10, 1999, to the
      Registrant’s Form SB-2, Registration No.
333-66085.





[3]
    Incorporated
      by reference to Registrant’s Form 10-QSB for the quarter ended September
      30, 1999.





[4]
    Incorporated
      by reference to the Registrant’s Form 8-K dated January 14,
      2000.





[5]
    Incorporated
      by reference to the Registrant’s Form 8-K dated October 6,
      2000.





[6]
    Incorporated
      by reference to the Registrant’s Form 10-QSB for the quarter ended
      September 30, 2000.





[7]
    Incorporated
      by reference to the Registrant’s Form 8-K dated July 1,
    2001.






27





[8]
    Incorporated
      by reference to the Registrant’s Form 10-QSB for the quarter ended
      September 30, 2003.





[9]
    Incorporated
      by reference to the Registrant’s Form 10-KSB for the year ended December
      31, 2002.





[10]
    Incorporated
      by reference to the Registrant’s Registration Statement on Form S-8 filed
      December 31, 2002, Registration No.
333-102310.





[11]
    Incorporated
      by reference to the Registrant’s Registration Statement on Form S-8 filed
      October 23, 2001, Registration No.
333-72080.





[12]
    Incorporated
      by reference to the Registrant’s Form 10-QSB for the quarter ended
      September 30, 2003.





[13]
    Incorporated
      by reference to the Registrant’s Form 8-K dated October 10,
      2003.





[14]
    Incorporated
      by reference to the Registrant’s Form 10-QSB for the quarter ended
      September 30, 2003.





[15]
    Incorporated
      by reference to Amendment No. 1 to the Registrant’s Registration Statement
      on Form S-3, filed December 4, 2003, Registration No.
      333-110567.





[16]
    Incorporated
      by reference to the Registrant’s Form 10-KSB/A for the year ended December
      31, 2003.





[17]
    Incorporated
      by reference to the Registrant’s Form 8-K dated March 29,
      2004.





[18]
    Incorporated
      by reference to the Registrant’s Form 10-QSB for the quarter ended March
      31, 2004.





[19]
    Incorporated
      by reference to the Registrant’s Form 8-K dated September 17,
      2004.





[20]
    Incorporated
      by reference to the Registrant’s Form 10-QSB for the quarter ended
      September 30, 2004.





[21]
    Incorporated
      by reference to the Registrant’s Form 10-KSB for the year ended December
      31, 2004.





[22]
    Incorporated
      by reference to the Registrant’s Form 8-K dated March 7, 2005.








28